Three different lease transactions are presented below for Sandhill Enterprises. Assume that all lease transactions start on January 1,2024. Sandhill does not receive title to the properties, either during the lease term or at the end of it. The yearly rental for each of theleases is paid at the beginning of each year. Sandhill Enterprises prepares its financial statements using ASPE.Lease termEstimated economic lifeYearly rental paymentFair market value of leased assetPresent value of lease rental paymentsInterest rateManufacturingEquipment5 years15 years$18,000$126,000$81,2703.5%Vehicles6 years7 years$19,260$109,200$100,9624%OfficeEquipment3 years5 years$5,010$22,500$12,9128%Ass me that Sandhill Enterprises has purchased the vehicle for $109,200 instead of leasing it and that the amount borrowed was$109,200 at 8% interest, with interest payable at the end of each year. Prepare the entries for 2024. (List all debit entries before creditentries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "NoEntry" for the account titles and enter O for the amounts. Record entries in the order displayed in the problem statement.) Entry" for the account titles and enter O for the amounts. Record entries in the order displayed in the problem statement.)DateAccount Titles(To record interest payment.)(To record depreciation expense.)DebitCredit

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Three different lease transactions are presented below for Sandhill Enterprises. Assume that all lease transactions start on January 1, 2024. Sandhill does not receive title to the properties, either during the lease term or at the end of it. The yearly rental for each of the leases is paid at the beginning of each year. Sandhill Enterprises prepares its financial statements using ASPE. Lease term Estimated economic life Yearly rental payment Fair market value of leased asset Present value of lease rental payments Interest rate Manufacturing Equipment 5 years 15 years $18,000 $126,000 $81,270 3.5% Vehicles 6 years 7 years $19,260 $109,200 $100,962 4% Office Equipment 3 years 6 years $5,010 $22,500 $12,912 8% Assume that Sandhill Enterprises has purchased the vehicle for $109,200 instead of leasing it and that the amount borrowed was $109,200 at 8% interest, with interest payable at the end of each year. Prepare the entries for 2024. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No

Three different lease transactions are presented below for Sandhill Enterprises. Assume that all lease transactions start on January 1, 2024. Sandhill does not receive title to the properties, either during the lease term or at the end of it. The yearly rental for each of the leases is paid at the beginning of each year. Sandhill Enterprises prepares its financial statements using ASPE. Lease term Estimated economic life Yearly rental payment Fair market value of leased asset Present value of lease rental payments Interest rate Manufacturing Equipment 5 years 15 years $18,000 $126,000 $81,270 3.5% Vehicles 6 years 7 years $19,260 $109,200 $100,962 4% Office Equipment 3 years 6 years $5,010 $22,500 $12,912 8% Assume that Sandhill Enterprises has purchased the vehicle for $109,200 instead of leasing it and that the amount borrowed was $109,200 at 8% interest, with interest payable at the end of each year. Prepare the entries for 2024. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A lease agreement that qualifies as a finance lease calls for annual lease payments of $26,269 over a six-year lease term (also the asset’s useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 5%. Required: Determine the present value of the lease upon the lease's inception. Create a partial amortization table through the second payment on January 1, Year 2. If the lessee’s fiscal year is the calendar year, what would be the amounts related to the lease that the lessee would report in its income statement for the first year ended December 31 (ignore taxes)?
Lee Company entered into a lease of warehouse on January 1, 2020. The lease contract provided the following information: Lease term 5 years Estimated useful life of the leased asset 15 years Annual rental payable at the end of each year 600,000 Interest rate implicit in the lease 12% Included in the lease agreement an option for the lessee to extend the lease term for another 5 years. At the commencement date, the exercise of the extension option is not reasonably certain. At the December 31, 2022, the lessee decided to extend the lease for further 5 years. The agreement was finalized on January 1, 2023 with following arrangement on the extension option: New annual rental payable at the end of each year 700,000 New interest rate implicit in the lease 10% REQUIRED: Prepare table of amortization and journal entries for the entire lease term.
A lease agreement that qualifies as a finance lease calls for annual lease payments of $40,000 over a eight-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 4%. Required: a. Complete the amortization schedule for the first two payments. b. If the lessee's fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in its balance sheet at the end of the first year? What would be the interest payable? Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Required A Required B Complete the amortization schedule for the first two payments. Note: Enter all amounts as positive values. Round your answers to the nearest whole dollar. Date January 1, Year 1 January 1, Year 1 January 1, Year 2 $ Lease Payment 40,000 $ Effective…
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Three different lease transactions are presented below for Pharoah Enterprises. Assume that all lease transactions start on January 1, 2024. Pharoah does not receive title to the properties, either during the lease term or at the end of it. The yearly rental for each of the leases is paid at the beginning of each year. Pharoah Enterprises prepares its financial statements using ASPE. Lease term Estimated economic life Yearly rental payment Fair market value of leased asset Present value of lease rental payments Interest rate Manufacturing Equipment 5 years 15 years $16,800 $117,600 $75,852 3.5% Office Equipment 6 years 3 years 7 years 6 years $18,000 $4,680 $102,000 $21,000 $94,356 $12,060 Vehicles 4% 8% Assume that Pharoah Enterprises has purchased the vehicle for $102,000 instead of leasing it and that the amount borrowed was $102,000 at 8% interest, with interest payable at the end of each year. Prepare the entries for 2024. (List all debit entries before credit entries. Credit…
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The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Vance Company, a lessee. Commencement date January 1, 2020 Annual lease payment due at the beginning of each year, beginning with January 1, 2020 $113,864 Residual value of equipment at end of lease term, guaranteed by the lessee $50,000 Expected residual value of equipment at end of lease term $45,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, 2020 $600,000 Lessor's implicit rate 8% Lessee's incremental borrowing rate 8% The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Instructions a. Prepare an amortization schedule that would be suitable for the lessee for the lease term. b. Prepare all of the journal entries for the lessee for 2020 and 2021 to record the lease agreement, the lease…
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Applying New Lease Accounting Standards for Operating Leases On January 1 of the current year, CCH Corporation entered into the following lease contract. Based on the facts, CCH Corporation classifies the lease as an operating lease. Details of lease contract Leased asset Office space Lease term 5 years Annual lease payment $115,487 Upfront fees $10,000 Cost of debt capital 5% a. Determine the amount of the lease liability that CCH will add to its balance sheet at the inception of the lease. Amount of lease liability b. What amount will be added to the balance sheet as an asset? Amount added as an asset The rest of the questions are given in pictures below. please answer all parts correctly. i will upvote. thank you!!
Prepare the journal entries Leasing AG would make in 2020 related to the lease arrangement.
A lease agreement that qualifies as a finance lease calls for annual lease payments of $40,000 over a six-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 7%. Required: If the lessee's fiscal year is the calendar year, what would be the amounts related to the lease that the lessee would report in its income statement for the first year ended December 31 (ignore taxes)?
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